High-end consumers are increasingly turning to ethically produced products and are willing to pay a premium for these goods. But the luxury industry has a chequered history with sustainability. Dr Navdeep Athwal believes that Blockchain could be the answer that brands are looking for.
Luxury brands have a controversial relationship with sustainability due to a lack of transparency in the supply chain and accusations of animal and worker exploitation. Yet some of the industry’s most significant markets – Millennials and Chinese consumers – are increasingly seeking products that are both sourced sustainably and produced ethically.
Dr Navdeep Athwal, in a paper co-authored with digital agency specialising in the luxury industry Verb Brands, argues that Blockchain, the technology behind Bitcoin, is the solution to providing traceability in the luxury sector.
Blockchain is focused on security and transparency. The technology promises data authenticity through the use of advanced encryption and data validation algorithms. Using this powerful technology could give rise to a new generation of luxury sustainability monitoring, traceability and reporting – the key for brands prioritising transparency.
Each step of a product’s journey from source to store could be logged thereby creating an electronic decentralised ledger. With open access to this information, customers could read about a product’s provenance and verify its green credentials. This technology is also attractive to major brands as it could help to solve the issue of counterfeiting, again by tracking each link in the supply chain.
International diamond retailer, De Beers, already use a similar system called ‘tracr’ to decrease the likelihood that their gems were sourced in conflict-zones.
Dr Athwal added:
“Blockchain might not be the first technology that comes to mind when considering sustainability, however I believe that this technology can improve the visibility of supply chains within the luxury industry, in turn driving forward sustainability”.Dr Naveep Athwal
Traceability in the luxury supply chain is just one aspect of how embracing the digital revolution could change the industry.
The whitepaper highlights the need for brands to adapt to the ever-changing digital environment and continually evolve to meet customers’ emerging demands. Dubbing this phenomenon Digital Darwinism, the authors of the report spell out a warning to key players in the industry: adapt or perish.
Further research conducted by Dr Athwal explores sustainable luxury and how Blockchain can be utilised in this context in more detail. Many luxury powerhouses, such as LVMH and Kering, employ sustainability as a key strategic priority and have the ability to implement large-scale change such as using Blockchain to promote transparency.
Dr Athwal commented:
“Luxury shoppers have long been engaging in eco-conscious mindful buying behaviours, and the development of CSR initiatives by luxury organisations like LVMH; owners of Louis Vuitton may well see the adoption for blockchain technology not just to eliminate the problem of counterfeiting, but also to create transparent environmentally friendly supply chains”.